'Buy' Raymond Lifestyle Says Motilal Oswal As It Initiates Coverage; Sees 36% Upside

Motilal Oswal Report

Although the valuation of the Raymond Lifestyle Ltd.'s business has almost doubled since the demerger, the stock is currently trading at a relatively lower price/earning and an enterprise value/Ebitda (pre-Ind-AS-116) of 25 times and 16 times on FY26E, respectively.

The valuation is significantly lower than that of our coverage universe and other retail and discretionary companies, which are valued at an EV/Ebitda of ~35-40 times on FY26E.

While Raymond Lifestyle benefits from strong brand affinity, its valuation has been impeded by sluggish execution in the past (volatility in PAT growth over FY10-20).

However, as Raymond Lifestyle continues to exhibit a positive growth trajectory, characterized by revenue/profit after tax compound annual growth rate of 11%/15% over FY24-26E, we believe valuations could re-rate.

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